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Wednesday, 20 December 2017

It's been a while since I wrote my last post, though not all that long since it appeared here. In that time we've made a great deal of progress, fought some unexpected dragons, and come out what we think is rather ahead.

Back when I wrote part 1 I had just finished gathering data from a few test environments in preparation for making a decision on a hosting provider. As a major change, it had to go around all the major stakeholders, including those who know how to ask tricky questions. That took a little while since, with support from a major client, we underwent an external audit of our new infrastructure before declaring it ready for testing. This gave us confidence that best practices had been followed and, vitally, gave us the ability to ensure our security-conscious clients of the safety of their data.

After whittling down the options with the twin razors of Practicality and Money, we were left with a choice between two excellent and well-supported platforms: Google Cloud, and Amazon Web Services.

There was a small price difference in Google's favour and a small breadth of platform difference in Amazon's favour, but overall our final decision came down to ease of use and documentation. When you're renting essentially the same thing from the two biggest companies in commodity web hosting, it's the quality of life differences around the edges that outweigh the differences in the main offerings. For another company, and in particular for another sysadmin with different preferences, this decision might have been reversed - with no ill consequences, I hasten to add.

We eventually settled on using Google Compute Engine for the hosting, monitoring and so on, with a Cloud SQL instance as our database provision and a Cloud Storage bucket for documents and logos. This accomplished the aim of breaking our infrastructure up slightly from the previous situation of running everything on one server, giving us more flexibility to move forward.

Market Dojo is now running on a cluster of smaller instances behind a load balancer, with the shared state (messaging, file storage and database) abstracted to the other services. This means that each portion of Market Dojo - the application, the database and the document storage - can be scaled separately, granting us enormous flexibility. Under heavy load, we get bigger to best serve the requests. Under light load, we shrink, so saving both money and energy.

Further optimisations on the roadmap for next year, with the hope that we can deliver significant performance improvements as time goes by. We have already seen the benefits of being able to scale horizontally and deploy on a rolling basis, and while we will need to be careful to avoid vendor lock-in we have access to some of the most effective technology available.To read the first part of this blog series click here.

Market Dojo helps procurement professionals negotiate better with our on-demand eSourcing tools. If you’d like to find out more, get in touch or register for free and play around with our software for yourself!

Monday, 18 December 2017

This is the second guest article by Greg Tennyson, CPO at VSP Global, discussing the importance of managing your Tail Spend.

Pareto This

Tail Spend

Tail Spend generally follows the Pareto Principle of 20% input (Spend) equals 80% output (Suppliers). To state it differently 80% of your supplier base is generally equivalent to 20% of a company’s total spend. Compounding matters Tail Spend is considered a low priority, that is, each individual transaction is of a small dollar value and is typically unmanaged resulting in challenges with data clarity, integrity and visibility. Your classic garbage in, garbage out scenario.

But wait there is hope…

Tail Spend is important and can be managed. First, let’s do the math. A US-based analytics and tail spend management startup called FairMarkIT spent the past 9 months on hundreds of conference calls and in-person meetings with CPOs, VPs of Procurement, Heads of Sourcing and Purchasing from large organizations with spend under management ranging from $2B-$XB annually. Using those engagements as a baseline if we consider 20% of the $2B in spend under management that would then represent a Tail Spend opportunity valued at $400M.

Now let’s consider how most companies manage Tail Spend…. In those same conversations had with the ‘heads of’ one question was asked every time - ‘how do you currently manage your tail spend?’ Guess what, based on the garbage in, garbage out scenario most ‘heads of’ don’t try to manage tail spend.

Profiles

FairMarkIT discovered there are 3 different CPO profiles:

1) The CPO with minimal time who really doesn’t care. Their thought process is anything under a specific dollar threshold is too small to focus their team’s time and the trivial purchase size will limit its risk to the business.

2) The CPO that knows it’s an important problem to address, but has no idea where to start. The procurement of these small purchases is decentralized, untracked, and spans across so many categories that it feels like they are trying to boil the ocean.

3) The CPO that has established an initiative and is taking strategic, incremental steps to gain control and optimize unmanaged spend. This third CPO seems to always be looking for new innovative ways to challenge the status quo and has no problem shaking up legacy processes.

By using automated processes that identify and group unstructured data, FairMarkIT can aggregate your tail spend transaction history into a meaningful and actionable roadmap that a team can leverage to make business decisions around tail spend management. Most importantly, tell you where’s the best place to start.

Common Denominator

It boils down to risk. The current process to source tail spend purchases is typically informal, un-monitored, and lacks analysis, which allows people to make decisions at their own discretion. And if spend isn’t monitored, there are dominant outcomes:

1) People take the easy path to buy the product with little to no concern about getting the best price (Price Risk)

2) The initial purchase may have reflected the best price but the business doesn’t track pricing, so no one in the organization knows how susceptible different products are to fluctuations in price (Time Risk)

3) If the purchase is consummated below the radar was the purchase properly vetted (Operational Risk)

1) Price Risk

The most obvious risk is overpaying for a product or service. Those familiar with the world of B2B selling or purchasing know that pricing is not standardized and tends to be more like the Wild West. It’s no secret that companies pay varying amounts for the exact same B2B products, and if they’re not intelligently sourced, the risk of overpaying dramatically increases. I fully agree that not all tail spend purchases fall victim to this, as there are some categories and vendors that do hold fairly consistent price discounting levels, but, without tracking and reviewing the data, how can you even begin to identify your largest areas of risk?

2) Time Risk

The second type of risk is time, which is frequently viewed by a CPO as a team’s most valuable resource. The current process to source small to medium purchases is to email or physically call 1-2 suppliers, explain the product or service being purchased, and then collect and organize the returning bids. This is a manual process. Now fast forward that process across 10s of thousands to 100s of thousands of small purchases, depending on the size of the company that are made every single year. If you do want to increase the number of suppliers participating to use competitive forces to drive pricing down, you’re just tacking on additional minutes, hours, days, months to your annual sourcing process.

3) Operational Risk

The risks range from procurement fraud to showing favouritism and excluding qualified suppliers to potential cybersecurity concerns. If you’re not tracking or managing 80% of your purchases, how can you expect your buyers to intuitively know which businesses can supply what products at the best price, that mitigate the foregoing operational risks.

The question is …

What is in your Tail Spend that should keep you up at night and what do you plan to do about it? There are solutions out there that can help de-mystify your Tail Spend. I encourage you to consider the total Tail Spend amount, the associated risks and pull a project team together to assess next steps. In the end, your company will be better off as a result of the team’s work.

Can Procurement survive without email?

Market Dojo, a UK-based eSourcing provider, states that their #1 competitor is email. This is certainly true when it comes to Tail Spend, where the average business can have thousands of employees emailing quotation requests to suppliers every year. Catalogs, rate cards, framework agreements and purchase cards can be effective mechanisms to control this but there is inevitably leakage. Besides, how does a CPO ensure compliance if there is zero visibility of these email-based quotations?

Market Dojo’s solution is to make a quotation request easier than email. With just 3 text fields to fill and a drop-down list of categorized pre-approved suppliers, it’s a viable alternative for busy Operations folk who are on the go. By encouraging Operational users to invite half a dozen preferred suppliers to quote, instead of just 3 unknown ones by email, it drives competition. Even if this only resulted in a 5% more competitive quote, against the $400m average Tail Spend opportunity it can equate to a $20m saving!

So, solutions are out there to suggest that we can survive without email, we just have to make it easier for the organization to use them.

Market Dojo helps procurement professionals negotiate better with our on-demand eSourcing tools. If you’d like to find out more, get in touch or register for free and play around with our software for yourself!

Friday, 15 December 2017

Last week we had a triumph of a day, running an eAuction masterclass at The Birmingham Botanical Gardens with lots of familiar faces of current clients filling our venue!

The day consisted of a very informative and productive agenda, which started with two of our Directors, Nick Drewe and Alun Rafique giving a fruitful insight into Market Dojo and eAuctions.

Three of our clients gave fantastic presentations showing how eAuctions have worked for them and what they have learnt from using an eSourcing tool within procurement, thank you to Paul Haycock from Nortek, Andrew Russell from Housing and 21 Stephen Wrighton from Plastipak, all their presentations can be found on our website here.

We introduced our eAuction game to the day which allowed people to try what it was like being the supplier whilst using our tool in which everyone seemed to really enjoy and learn a lot, including the importance of sticking to price margins and the difference in performance during auction from a virtual negotiation platform as opposed to face to face.

Since the game had such a good response from our guests, for our future events we plan to get our guests to run the game from the host side as well as the supplier side so they can see what the typical auction behaviour consists of.

If you happened to come along on the day, from all here at Market Dojo we would like to say a big thank you! We hope you enjoyed the day and learnt something new!

Lots of guests stayed the whole day and at the end got the chance to ask lots of one to one questions to our directors to have a more bespoke and intimate feel of market dojo and answers to their queries before having a stroll around the beautiful grounds to end the day.

(Just in case you didn’t notice the dojos in the Japanese Garden next to us here's a picture - completely unplanned!)

If you missed out this time, we plan to hit the road for our next event up north! Register your interest here and don't hesitate to get in to touch with us for location and agenda suggestions, or any information or questions email: info@marketdojo.com alternatively

Call us on : +44 (0) 117 230 9200

Market Dojo helps procurement professionals negotiate better with our on-demand eSourcing tools. If you’d like to find out more, get in touch or register for free and play around with our software for yourself!

Wednesday, 13 December 2017

When a salesperson starts to work within a company, it is generally accepted they would use a CRM system. Is it mandated? Perhaps not specifically but it is expected and it is needed for forecasting and tracking conversations.

When a finance person starts with a company, do they have systems they have to use? Absolutely and again there is more of an expectation then it being mandated. However, would one say it is mandated?

A procurement person who moves into a new company, do they ask where is the eSourcing system or do they ask for their email?

Invariably we have seen that the majority of procurement professionals will use email, even in organisations who have eSourcing systems. In many cases the eSourcing systems are only seen useful for eAuctions and complex tenders. However by using email, there is a lack of data centralisation and it is challenging to scale resulting in leaving savings on the table.

How do we all encourage the use of the most appropriate tools?People: Are the procurement professionals who come into organisations exposed to the right level of training? Although how much training would be required over what period for the change to take effect?Technology: Is the technology out there on par with email? Do the providers need to focus more on benefits for all levels on the organisation to garner more interest and drive change from the top down. This is obviously a continued focus for software providers, especially those who are best of breed. If the tools are more savings forecast led, this might help speed adoption with the parallel to CRM systems and the sales forecasting required by finance.Process: Mandating is a dirty word it seems in many circles. When you mandate software, people tend to resist and look for work-arounds. However if it was mandated to use eSourcing, then even though there would be several months of change, training, challenges, it would all be soon forgotten and the benefits would be immediate and ever growing. If the tool is right, why wouldn't you?

Afterword:Market Dojo has been working tirelessly towards eSourcing adoption. To tackle these challenges we have two new improvements. Firstly we are more integrated with savings tracking which helps drive adoption from the top down. Secondly, we are very excited about the upcoming release of Quick Quotes. This will give the ability for procurement to help manage tail end spend. The quotation portal will be available to anyone in the organisation to raise a quote. The benefit for procurement is that they will gain more visibility of the processes used in the extremities of the organisation, centralise the data and allow for better reporting.

Market Dojo helps procurement professionals negotiate better with our on-demand eSourcing tools. If you’d like to find out more, get in touch or register for free and play around with our software for yourself!

Friday, 8 December 2017

I recently found procurement data for England and Wales police force online and thought it would be fun to see what it contained. Market Dojo have been thinking about reporting recently, and have found that a lot of our customers are using or planning to use Microsoft Power BI. To learn more, I decided to use Power BI in my analysis.

The purpose of publishing the data was to help identify where forces could save money by working together. The benefits this can bring were demonstrated by a recent e-auction. Twenty forces, including Police Scotland and British Transport Police, collaborated to buy almost 3,000 police vehicles, and the deal delivered £3.7m of savings for the taxpayer*.

Data

The data is provided in csv files, with 2 files (services and equipment) for each of the 43 police forces. By combining all the separate files, we were able to analyse it more easily.

Total spend by force

The data covers 38 specific categories of spend. By multiplying the price by the quantity for each of the items included in the report, we can see how much each force spent.

Services Vs Equipment

Viewing by force, and showing the breakdown of services v equipment data, we immediately see that spending by the Met is much larger than other forces. Not really surprising as it has more than 33,000 officers, compared to around 8,000 for the second largest force (Greater Manchester) **.

Metropolitan Police

A very large proportion of the Met’s £19,161,138.30 spend goes on office cleaning, in fact, it is 70.59% of the total spend reported!

It is difficult to compare this with similar forces. Greater Manchester, West Midlands and Merseyside all use an in-house cleaning service and as a result, do not publish a figure for this service. The comments section is frequently used for this category with South Wales is a good example:

“The force does not pay for standard office cleaning per m2 as the cost is dependent on many factors such as frequency of clean, type of use (canteen, office, store etc) and what if any equipment is needed. A monthly bill for cleaning the force premises is monitored through a schedule of rates per building. The force's Estates department has calculated the average cost per m2 per annum taking all these considerations into account.”

However, it is interesting to note the big differences in how this category of spending is treated, and perhaps this is an opportunity to share best practice. Cleaning services and energy supply are both areas where eAuctions have been used with great success.

Most expensive items by average cost

The most expensive items included were the vehicles, and as this is something that is purchased less frequently, the variance between forces is quite large.

The most expensive item is the ‘Compact High-performance estate vehicle - fully converted’. Costs range from £34,724.21 to £17,252.27. Different makes are purchased including BMW, Volvo and Vauxhall and it appears that they are customized for specific uses. We can see from the graph that there is a relationship between the number of items purchased and the cost. The big difference in cost probably relates to the different requirements for each force, and even between individual vehicles, however as vehicle purchasing was the area highlighted as an opportunity for collaboration and saving*, it may be possible to improve in this area.

Cheapest five items by average unit cost.

Of the five cheapest items purchased, the one with the lowest cost was telephone call charges. I imagine there is significant variance here, but noticed this is one category where none of the submissions included any clarifying comments.

Total published spend on per minute telephone call charges.

Many forces did not submit a number of minutes used, so total values are only available for some forces. The force that spent the most on call charges was Devon and Cornwall, at £10,290. Norfolk and Suffolk both reported a quantity of 11 minutes, but Lincolnshire used 2151 minutes for a total cost of £18.28

Conclusions

I found investigating these public data sets to be fascinating, and am sure that by sharing their data, procurement teams will be able to find new ways to collaborate and purchase more efficiently.

In reading the comments and clarifications that are included with the data, I was also reminded of some of the challenges and scrutiny which are part and parcel of public sector procurement.

Market Dojo is excited to introduce you to our newest member of team Dojo - Jon Pole. Coming all the way from South Africa he’ll be stepping into our business development manager position. We asked him a few questions to get to know a bit more about him.

What made you apply to work at Market Dojo?

I’ll set the scene - It was a late November evening, rain was pouring down. I was driving down the M5 on my way home from a job interview with a terrible telemarketing company, wondering if I should accept the job offer or not - do I sell my soul? I stopped at a services station to take a break from the terrible weather, I checked a few emails and there it was an invitation to interview for a company called ‘Market Dojo’ I checked out the company, the sun broke through the clouds and the rest is history.

What are you looking forward to in your new role?

It’s not often you get a chance to be part of a small company with so much potential, having the opportunity to build it up from the foundations and see yourself making a noticeable difference. I’m excited about generating new sales and heat-seeking new opportunities also just getting the opportunity to tell people I’m a ‘Business Development Manager’ at 22.

What is different about Market Dojo?

Everything about the company is taken at face value and is transparent, what you see is what you get. It’s also very rare when you get to sell a product that sells itself. I’m just really appreciating having the opportunity as a young person

What is the most unusual job you have ever had?

Whilst at University I worked at Heart radio as a marketing and promotions assistant. The unusual thing about this job is that we spent a lot of our time driving around in giant red 7 seaters plastered with the Heart logo. Whilst doing this we were giving out cakes, setting up gazebos, face painting children and being VIP backstage at Boardmasters. It was pretty fun and I was the only man working with 23 girls. So, all in all, it was okay...

What is your favourite book/movie?

It couldn’t be anything other than Lord of the rings, huge Tolkien fan. My inner nerd will never lie about it.

What is the most embarrassing song you have on your phone

As a music student and musician I have and listen to everything I mean I could list 50 pages of embarrassing songs but instead here is a taster:

N-Dubz - Strong Again

Celine Dion - My Heart Will Go On

One Direction - Best Song Ever

Justin Bieber - One Time

Where have you travelled abroad? What was your favourite country?

I grew up in South Africa and it will always be my favourite in terms of natural beauty. The best foreign trip of my life has been going to Finland earlier this year to see the northern lights, it was the best thing I’ve ever done, absolutely breathtaking if you haven’t been before then make time to go ASAP, it’s worth it. I also love Italy the culture is amazing, the food is my favourite and I am also 60% fluent in Italian according to Duolingo.

What are your hobbies and interests?

My main hobby or passion is singing, I’m actually in an indie/electronic band I sing, play guitar and synth. So performance is a key part of what I love to do, I’ve always thought maybe it’s just because I love being the centre of attention - maybe that’s why I turned up to my first day at work in a full suit when the dress code was casual.

What actor would you cast to play yourself in a movie?

That’s easy, it’s gotta be Leonardo Di Caprio. But not the young pretty boy - think more like between Wolf of Wall Street and The Revenant, with a bad hairline and dad bod running around the park with a water pistol. There certainly are some similarities to be seen there.

How would you describe yourself for those about to meet you at Market Dojo?

I would make these lucky people very aware of my lack of common sense, it is actually a very severe case of it. I’ve been described by friends as a ‘puppy - you can’t be mad at it for messing things up because it doesn’t know any better’.

I won’t accidentally wet myself in the house but I spend days making people question how I actually got an honours degree.

Interesting facts about yourself?

Well, obviously I’m South African, not that you’d be able to tell from the well-spoken British accent with a Somerset twang.

I’ve performed at the London O2 and got a support slot with Gabrielle Aplin before she backed out and got someone else.

If you’ve seen Braveheart I’m a direct descendant of William Wallace and could be a Scottish prince if history had played out in my favour.

What are you hoping to bring to Market Dojo?

A hungry sense of ambition and a desire to succeed with Market Dojo.

Also to make sure Market Dojo has an obviously visible growth from the date I joined.

Finally, I hope to become a main driving force within this company and with that enthusiasm, I’m confident I will succeedConnect with Jon on LinkedIn here!

Market Dojo helps procurement professionals negotiate better with our on-demand eSourcing tools. If you’d like to find out more, get in touch or register for free and play around with our software for yourself!